The State’s bank guarantee from September 2008 was “too generous” and “magnified the fiscal impact of the banking crisis”, said the European Commission’s director general for economic and financial affairs.
"At the same time, it is clear that the decision was taken in a very difficult situation characterised by great risks and uncertainty," Marco Buti told the banking inquiry.
Mr Buti said he did not envy the decision the then government had to take and his only criticism was Ireland should have consulted first with its European partners, given the magnitude of the decision.
He said the limited surveillance mandate of the commission turned out be a “serious problem” when the global financial crisis emerged in late 2008.
"Many crucial events that took place in Ireland between 2008 and 2010 concerned the banking sector and thus fell outside the range of the European Commission and my DG in particular," he said.
Mr Buti said the implementation of Ireland’s €85 billion troika financial assistance programme was “smooth and efficient” but they could have done more to reduce the burden on the less well off.
Mr Buti said he would not change in any fundamental way the basics of the programme.
He said the commission was aware of the stance of the European Central Bank (ECB) in November 2010 to the effect that it would not continue to support the Irish banks without the country entering a bailout programme although it was not a party to the letter sent by the former ECB president Jean-Claude Trichet to the late minister for finance Brian Lenihan.
